Date Of Judgment 31-08-2018, Ita v. M/S. Global E-Business Operations Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 31 DAY OF AUGUST 2018 PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS.JUSTICEK S.SUJATHA I.T.A. No.117/2018 BETWEEN : 1.THE PR. COMMISSIONEROF INCOME-ITAX"[‘T]FLOOR, BMTC BUILDING ~80 FEET ROAD, KORMANGALABENGALURU-560095.. «|THERE DEPUTLY COMMISSIONEOF INCOME-TAXCIRCLE-11(3), PRESENT ADDRESSDCIT, C-3(1)(2), 2 FLOOR, ©BMTC BUILDING, 80 FEET ROAD, |KORMANGALABBNGALURU 560095._ APPBLLANTS| (BY SRI DILIP, ADV FOR SRI ARAVIND.K.V., ADV.) AND ; M/s. GLOBAL E-BUSINESSOPERATIONS PVT. LTD., HP TOWER 1,203,GOLF VIEW CAMPUSWIND TUNNEL ROAD _MURUGESHPALYA|BBNGALURU 56001 7._. RESPONDENT.(BY SRI ANKUR PAT, ADV.) Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd., 2/8 THIS INCOMB TAX APPBAL IS FILED UNDER SECTION|260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER|DATED 16/08/2017, PASSED IN IT(TP)A No.318/BANG/2014,|FOR THE ASSESSMENT YEAR 2005-2006 VIDE ANNEXURE-D,PRAYING TO: 1. FORMULATE THE SUBSTANTIAL QUESTIONS|OF LAW STATED ABOVE. 2. ALLOW THERE APPKAL AND SEASIDE THR ORDERS PASSED BY THR INCOME TAX APPELLATETRIBUNAL,|BBENGALURUIN|IT(TP)ANo.318/BANG/2014|DATED:16/08/2017 VIDE ANNEXURE-D AND CONFIRM THE)ORDER OF THR APPKLLATKE COMMISSIONER CONFIRMING THEORDER PASSED BY THR DBPUTY COMMISSIONER OF [INCOMETAX, CIRCLE-3(1)(2), BENGALURU. THIS APPEAL COMING ON FOR ORDERS, THIS DAY,|S. SUATHA, J., DELIVERED THE FOLLOWING: JU DBiGMENT Mr. Dilip,Adv. tor Mr. Aravind.K.V.,,Adv. for Appellants — Revenue.Mr. Ankur Pai,Adv. for Respondent — Assessee. This Appeal is filed by the Revenue purportedlyraising substantial questions of law arising from theOrder of the Income Tax Appellate Tribunal, Bangalore Bench ‘B’, Bangalore, inIT[TP|A No.318/Bang/2014 dated|16.08.2017, relating to the Assessment Year2005-06. 2.The substantial questions of law framed by the Revenue in the Memorandum of Appeal are asunder: Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd., 3/8 aWhether,Onlthe.factsandcircumstances of the case, the Tribunal ts right in|law in holding that the expenses reduced fromthe export turnover has to be reduced from thetotal turnover also when no provision undersection IOA provides for exclusion of suchexpenses from the total turnover?| D2 Whether,OF.thefactsandin|circumstances of the case, the Tribunal ts right in|holding that M/s. Maple E-Solutions Ltd., cannotbe taken as a comparable being functionallydifferent, when it satisfies all the qualitative andquantitative filters applied by the TPOP| 3.|Whether,OF.thefactsandin|circumstances of the case, the Tribunal is correctin superimposing the decision of other benches ofthe ITAT in case of the assessee to reject thiscomparable company, whenselectionofcomparable companies in transfer pricing studydepends on assessee specific FAR analysis? 4 |Whether,OF.thefactsandin|circumstances of the case, the Tribunal ts right in|law in concluding that M/s. Maple E-SolutionsLtd.,1SnotcomparableTotheaAsSSCSSCoverlooking the fact that the company is selected Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd., 4/8 as comparable by the TPO on the basic of Specificfacts brought on record?”| 3.Learned Counsel for the Appellants-Revenuedoes not press substantial question No.1. 4Submission is taken on record. 5.The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue andRespondent-Assessee, has returned the findings as under: Regarding Substantial Question of Law Nos.2, 3 & 4: 4 |Whether,OF.thefactsandin|circumstances of the case, the Tribunal ts right in|law in concluding that M/s. Maple E-SolutionsLtd.,1SnotcomparableTotheaAsSSCSSCoverlooking the fact that the company is selected Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd., 4/8 as comparable by the TPO on the basic of Specificfacts brought on record?”| 3.Learned Counsel for the Appellants-Revenuedoes not press substantial question No.1. 4Submission is taken on record. 5.The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue andRespondent-Assessee, has returned the findings as under: Regarding Substantial Question of Law Nos.2, 3 & 4: “73 We have heard the rival contentions|of the parties. The subsequent decision of theDelhi Tribunal Stream International Services P.Ltd., v. Addl. Director ofIncome-tax [Intl. Taxation/[31|taxmann.com227], has considered the order|passed by the tribunal in the matter of ITO v.CRMServices India.P|Ltd.,(201 1)|114taxmann.com96] and thereafter in paras 17 and)18, it was held by the Tribunal as under: KVeVNKK” Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd., 5/8 71.4We find that no contrary judgment toostream International Services P. Ltd., [Supra] hasbeen brought to our notice. The Learned. DR hasfailed to point out any reason as to why the ratiolaid down by the coordinate bench in the mater ofostream International Services P. Ltd., [supra] isnot applicable to the facts and circumstances ofthe present case. Accordingly, we have nohesitation to delete this comparable, namely,Maple eSolutions Ltd., as the subsequent decisionof the Tribunal in Stream International Services P.Ltd., [Supra/ will have more precedence value incomparison to the earlier order. Accordingly, wedirect exclusion of this comparable.” 6.However, this Court in a recent judgment inI.T.A. Nos.536/2015 c/w 537/2015delivered on25.06.2018 (Prl. Commissioner of Income Tax & Anr.-—v- M/s Softbrands India Pvt. Ltd,) has held that inthese type of cases, unless an ex-facie perversity in thefindings of the learned Income Tax Appellate Tribunal is"established by the appellant, the appeal at the instanceof an assessee or the Revenue under Section J60-A otthe Act is not maintainable. Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd., 6/8 The relevant portion of the said judgment is quoted below for ready reference: “Conclusion: 55.Asubstantialquantumof|international trade and transactions dependsupon the fair and quick judicial dispensation|in such cases. Had it been a case oOf|substantial questionof|interpretationof|provisions of Double Taxation AvoidanceTreaties (DTAA), interpretation ofprovisions ofthe Income Tax Act or Overriding Effect of the|Treaties over the Domestic Legislations or the |questions like Treaty Shopping, Base Erosionand Profit Shifting (BEPS), Transfer of Shares|in Tax Havens (like in the case of Vodafone|etc.), tf based on relevant facts, such|substantial questions of law could beraised before the High Court underSection260-Aof the Act, the Courts could have|embarked upon such exercise offraming and|answering such substantial question of law.On the other hand, the appeals of the present|tenor as to whether the comparables have. Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd., 7/8 been rightly picked up or not, Futers for|arriving at the correct list of comparables|have been rightly applied or not, do not in our|consideredopinion,|giverisetO arysubstantial question of law. Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd., 7/8 been rightly picked up or not, Futers for|arriving at the correct list of comparables|have been rightly applied or not, do not in our|consideredopinion,|giverisetO arysubstantial question of law. 06. Weare therefore of the consideredopinion that the present appeals filed by the|Revenue do not give rise to any substantialquestionof|lawand.theSuggested|substantial questions of law do not meet therequirements ofSection 260-A|of the Act andthus the appeals filed by the Revenue are|found to be devoid of merit and the same are.liable to be dismissed. 57. We make it cleqr that the sameyardsticks and parameters will have to beapplied, even tf such appeals are filed by the|Assessees, because, there may be cases.where the Tribunal giving its own reasons|and findings has found certain comparables|to be good comparables to arrive at an|7s | “ALength Price“ in the case of the assesseeswith which the assessees may not be|satisfied and have filed such appeals before Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd., 8/8 this Court. Therefore we clarify that mere|dissatisfaction with the findings of facts|arrived at by the learned Tribunal ts not at all|a sufficient reason to invoke.Section 260-Aof the Act before this Court. o8. The appeals filed by the Revenueare therefore dismissed with no order as to|costs.” T.Havingheardthelearnedcounsels.appearing for the parties, we are therefore of the opinion that no substantial question of law arises in the presentcase also. The Appeal filed by the Appellants-Revenueis liable to be dismissed and it is dismissed accordingly. —No costs. NGC. Sd/-.JUDGE. Sd/-.JUDGE|